Benefits November 11, 2004

Canadian Employers See Increase in Financial Advice to Employees as a Necessity

November 11, 2004 (PLANSPONSOR.com) - Canadian employers who offer defined contribution (DC) plans overwhelmingly feel that providing access to financial advice to employees will be a necessity in the future, indicating shifting views in the Canadian DC plan landscape.
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According to a report commissioned by Sun Life Financial and conducted by Benefits Canada magazine, almost 60% of employers feel that providing financial advice will be necessary in the coming years to participants in their DC plans. While only 6% of employers say they offer such advice, 25% say they will offer it within two years.

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Sixty-three percent also think that they have a ‘moral and ethical obligation’ to ensure that contributing employees understand the information given to them. Fifty-four percent say that they currently provide information to employees, while 40% claim they offer education.

The study is based on 157 online surveys completed by Canadian employers who offer DC plans, hybrid plans, or group registered retirement plans. Sun Life Financial’s Group Retirement Services division supplies pension plan services in Canada, and has over C$28 billion in assets under administration.

Administration November 10, 2004

PBGC Seeks $28M in US Airways Stock

October 23, 2003 (PLANSPONSOR.com) - When it appears in the US Bankruptcy Court on Monday, the Pension Benefit Guaranty Corporation (PBGC) hopes to be awarded between $12 million and $28 million in US Airways stock set aside for unsecured creditor claims.
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US Airways filed Chapter 11 in August 2002 and its creditor protection ended March 31, 2003. When US Airways ended its defined benefit pension plan, the PBGC assumed responsibility for it, agreeing to pay pension benefits to roughly 7,000 active and retired US Airways pilots and beneficiaries.

Ten percent of US Airways stock, approximately $560 million, was reserved for settlement with unsecured creditors. Since the PBGC is an unsecured creditor, it would be paid with this post-bankruptcy stock.

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When the PBGC took responsibility for the plan, it estimated the pension plan to be underfunded by $2.5 billion, since the plan only had $1.2 billion in assets to cover $3.7 billion in benefit liabilities. However, a recent assumed return on plan assets has led the airline to decrease the plan liability value to $890 million.

The pension agency will present their case to a US Bankruptcy judge in eastern Virginia, where US Airways filed Chapter 11, and if the court sides with the PBGC, it could be awarded between $12 million and $28 million.

Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2003 is $43,977.24 a year. However, pilots must retire at 60, so the maximum paid by the pension agency per year to beneficiaries is approximately $28,500.

More information about the US Airways’ pension plan for pilots is available at the PBGC Web site, www.pbgc.gov/usairways . Workers and retirees with additional questions may contact PBGC’s Customer Service Center toll-free at 1-800-400-7242.

The PBGC is a federal corporation created under the Employee Retirement Income Security Act (ERISA). It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in about 32,500 private-sector defined benefit pension plans.

Alison Cooke

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